Sunday, December 18, 2005

Becker and Posner on obesity and junk food advertising for children

The Becker-Posner Blog, a leading economics weblog by University of Chicago Nobelists Gary Becker and Richard Posner, tackles the obesity epidemic this week. The authors had just read the new Institute of Medicine report criticizing junk food advertising for children. As one might expect from these writers, they point out that much of the economic burden of obesity is carried by the overweight persons themselves, so the writers suggest there is little grounds for a government response.

I encourage Becker and Posner to reconsider their view with an open mind. They point out that there is only a comparatively weak "externality" argument for government interest in this problem (although one could talk about how many Americans share the same risk pools, due to medical insurance). However, the market failure that motivates a sensible government response to the obesity epidemic is an information failure. Just for starters, see here for a discussion of nutrition disclosure in restaurants, and here for a discussion of government communication about diet, health, and obesity. Because the federal government actively promotes advertising campaigns to get people to eat more beef, pork, and cheese, at a cost of several hundred million dollars each year, it would be far too timid to suggest that a laissez-faire response will suffice. Policy reform is required.

Still, I enjoyed the exchange of views. Gary Becker criticizes the IOM report:
Some persons at the Institute of Medicine went further and raised the prospect of possible Congressional regulation of TV ads oriented toward children, even though, as we will see, the evidence provided by the report is weak and not persuasive....

If children nowadays are heavier because they are less physically active than they used to be, or because their parents find fast food cheap and convenient, it is difficult to see how advertising by food and beverage companies are to blame. And despite the hype the study received, the Institute of Medicine's report on obesity and advertising did not present any convincing evidence that television advertising oriented toward children has been responsible for the increase in children's obesity during the past quarter century.
Posner adds:

Not only would banning television advertising of fattening foods on programs oriented to children and teenagers not reduce obesity, but it might increase it. To the extent that, as Becker suggests, such advertising has a much greater effect on brand shares than on aggregate demand for the products, the advertisers as a whole might be better off if forbidden to advertise. With higher profits, and an important form of nonprice competition eliminated, advertisers might compete more on price, resulting in lower prices to consumers and therefore greater competition.
Both posts generated a wealth of comments on the Becker-Posner Blog, including some comments from leading writers on these topics. The authors respond today. Becker suggests one more provocative explanation for the obesity epidemic:

One reasons seldom mentioned as a general factor partly behind the rise in obesity is the expectation that new drugs will greatly reduce the adverse consequences of being obese. I am not claiming that many teenagers are conscious of this consideration. However, any one who has observed the development of blood pressure and cholesterol lowering drugs during the past few decades can rationally believe that in twenty years or so still newer drugs that control diabetes and other diseases will be developed. Then for anyone who likes to eat sugary and fat foods, it does not seem so irrational to do so when the consequences will be much less harmful to health than they are at present.
Seems far-fetched, but clearly reflects the imagination of a true blue economist.

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